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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Coupang, Inc. (NYSE:CPNG).
Is Coupang, Inc. (NYSE:CPNG) a great investment today? The best stock pickers were in an optimistic mood. The number of bullish hedge fund bets advanced by 40 lately. Coupang, Inc. (NYSE:CPNG) was in 40 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that CPNG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
If you'd ask most market participants, hedge funds are assumed to be unimportant, outdated financial vehicles of the past. While there are more than 8000 funds with their doors open at the moment, Our experts hone in on the leaders of this club, about 850 funds. These hedge fund managers control bulk of all hedge funds' total asset base, and by keeping an eye on their unrivaled stock picks, Insider Monkey has figured out a number of investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Lee Ainslie of Maverick Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's analyze the key hedge fund action encompassing Coupang, Inc. (NYSE:CPNG).
Do Hedge Funds Think CPNG Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40 from the fourth quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in CPNG a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Coupang, Inc. (NYSE:CPNG) was held by Greenoaks Capital, which reported holding $13862.4 million worth of stock at the end of December. It was followed by Maverick Capital with a $5033.3 million position. Other investors bullish on the company included SCGE Management, RIT Capital Partners, and Foxhaven Asset Management. In terms of the portfolio weights assigned to each position Greenoaks Capital allocated the biggest weight to Coupang, Inc. (NYSE:CPNG), around 93.71% of its 13F portfolio. RIT Capital Partners is also relatively very bullish on the stock, dishing out 65.79 percent of its 13F equity portfolio to CPNG.
Now, key hedge funds have jumped into Coupang, Inc. (NYSE:CPNG) headfirst. Greenoaks Capital, managed by Neil Mehta, initiated the most valuable position in Coupang, Inc. (NYSE:CPNG). Greenoaks Capital had $13.8624 billion invested in the company at the end of the quarter. Lee Ainslie's Maverick Capital also initiated a $5.0333 billion position during the quarter. The following funds were also among the new CPNG investors: Christopher Lyle's SCGE Management, Jacob Rothschild's RIT Capital Partners, and Michael Pausic's Foxhaven Asset Management.
Let's check out hedge fund activity in other stocks similar to Coupang, Inc. (NYSE:CPNG). We will take a look at Cigna Corporation (NYSE:CI), U.S. Bancorp (NYSE:USB), General Motors Company (NYSE:GM), Mondelez International Inc (NASDAQ:MDLZ), BP plc (NYSE:BP), Canadian National Railway Company (NYSE:CNI), and Gilead Sciences, Inc. (NASDAQ:GILD). All of these stocks' market caps are similar to CPNG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CI,53,2497828,-4 USB,43,8335231,-17 GM,86,8053011,16 MDLZ,45,2845001,-5 BP,29,1243778,0 CNI,36,4705189,5 GILD,65,2689659,-7 Average,51,4338528,-1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 51 hedge funds with bullish positions and the average amount invested in these stocks was $4339 million. That figure was $21669 million in CPNG's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand BP plc (NYSE:BP) is the least popular one with only 29 bullish hedge fund positions. Coupang, Inc. (NYSE:CPNG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CPNG is 25.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately CPNG wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CPNG investors were disappointed as the stock returned -24.2% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.